It will eventually be available in offline stores as well. It is also the first device that will be sold through open sale, and not flash sale.Xiaomi launched the Redmi 2 Prime on Monday, its first to be assembled in India, which began selling on Flipkart, Snapdeal and Amazon in its first open sale from 2 pm today for Rs6,999. The No 1 Chinese smartphone maker also announced its partnership with Foxconn, the world's largest contract manufacturer, which has assembled Redmi 2 Prime and will make all of Xiaomi's smartphones in India going forward.

India is the second country outside China to get locally-assembled Xiaomi devices after the Beijing headquartered company launched locally made phones in Brazil, also made by Foxconn, in July this year. The Chinese company however didn’t specify on when it would start complete manufacturing in the country.

"When we started out in July last year, we wanted to become part of the fabric of India," said Hugo Barra, vice president of Xiaomi Global. "We will make large quantities of Redmi 2 Prime. Overtime, all of our phones that we sell in India will be made in India," he added without giving a timeline.

Xiaomi, which clocked 3 million devices by July-end, may well be the only handset maker till date to begin making phones out of India within a year of selling phones here. Barra added that it took Xiaomi nearly 18 months - three times compared to India - to set up the Brazil unit.

Foxconn has been making the phones from a brownfield factory which has been set up in Sri City area of the recently bifurcated state. ET was the first to report the development in its July 15 edition.

Redmi 2 Prime will be priced at Rs 6,999, which will eventually be available in offline stores as well. The smartphone is also the first device that will be sold through open sale, and not flash sale.

The device is equipped with a 4.7-inch screen carrying 720 x 1280 HD resolution. It has a Snapdragon 410 SoC is under the hood, containing a quad-core CPU and the Adreno 306 GPU. 2GB of RAM is inside along with 16GB of native storage, besides a 32GB capacity microSD. The rear-facing camera is 8MP while the front-facing camera has a 2MP camera. The phone is powered by a 2200mAh battery, and Android 4.4.4 is pre-installed with MIUI 6 running on top.

Barra said the company was prepared with high inventories for Redmi 2 Prime since it is locally made, and the cost is lower than what it would be, if it was imported.

The Make in India move is a big boost for the company which has already created a strong presence in the Indian market, on the back of high specked yet low priced smartphones it sells, which has become its USP.

"Manufacturing in India will shorten the time between phone being produced it being delivered, which means we can operate at very low inventory levels," Barra added. This means lower operational costs, increased efficiencies and lower priced smartphones for end consumers. It also reduces the month-long time taken to get the phones to partner warehouses, to two weeks.

The strategy also underlines India market's criticality which has become its largest market outside home. India head Manu Jain said that the company may also consider exporting devices out of India in the future, but will focus on Make in India for now.

Xiaomi's move ties back with the company's recent plans to start selling phones through brick and mortar stores in 10-15 cities over the next two months before scaling up operations to encompass a larger number of cities.

Xiaomi has a dedicated Foxconn facility to itself in Sri City, which has multiple assembly lines. Jain did not share the existing or projected capacity, but said that it can be ramped up as per demand. The number of people hired for the facility will also increase with the ramp up, he added without sharing exact employee count.

A person familiar with Foxconn’s plans said that the company is expanding its Sri City facility by 250,000 square feet and 20 assembly lines by December. Currently, the plant stands at 60,000 sq feet and has four lines.

Kartikeya Misra, director of industries, said that the Andhra Pradesh government is talking to more companies, including handset makers, to set up shop in the state.

At present, all of Xiaomi's products including phones are imported from China, a model followed by a number of handset makers comprising over 90% of the mobile phones sold in India. Only big electronic manufacturers in India are Samsung and LG. Last week, Sony also announced that it was going to get its Bravia Android TVs made in India via a contractor.

Barra added that it had solved the 'chicken and egg situation' by setting up here, and will now help build the component ecosystem in the country, which is absent at present.

Xiaomi gets its smartphones made from Foxconn and Inventec in China, the company's home market where it has pipped Apple and Samsung to take the top spot by volumes in the April to June quarter with a 14% share, as per Canalys.

China also has a massive component ecosystem, which brings economies of scale and help produce low cost phones and other electronic products.

With smartphone penetration in India still around 30%, the country becomes the perfect ground for smartphone makers to create a strong foothold and a larger share of the exponential growth. With majority of a billion people still to get on the Internet which require smartphones, India provides a massive opportunity.

The company is amongst the top half a dozen players in India with under 5% market share raked up since July last year.

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